By Stella Lorence
BU News Service
BOSTON – PixarBio CEO Francis Reynolds was sentenced to seven years in prison with three years of supervised release in U.S. District Court Tuesday.
Reynolds was convicted by a jury on one count of security fraud and three counts of obstructing a Securities and Exchange Commission investigation after a three-week trial in October 2019.
Reynolds made false and misleading statements to investors about the development timeline of the Medford biotechnology company’s product “NeuroRelease,” a post-surgery pain reliever. Reynolds claimed that the drug could solve the opioid crisis, according to prosecutor Sarah Bloom.
“This was a group of people who were particularly trusting,” Bloom said of PixarBio investors. “They fell victim to Reynold’s storyline.”
Contrary to Reynold’s claims, NeuroRelease was not a new drug that could solve the opioid crisis but rather an existing drug that PixarBio developed a new injection-based delivery method for, according to a May 2018 Department of Justice release.
Reynolds also made misleading statements about his medical background, falsely claiming that he had cured his own paralysis after a 1992 car accident. He also engaged in manipulative trading practices with two associates, Kenneth Stromsland and Jay Herod.
“This is a very serious set of frauds and a very sophisticated set of frauds,” Bloom said. “It’s important that the market sees that there is a very serious punishment for that.”
Both parties are expected to finalize the restitution documentation by Feb. 18. The actual loss calculation was estimated to be $7.5 million.
Reynolds is also the defendant in an ongoing civil case against the Securities and Exchange Commission.
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